Friday, February 26, 2010

Edwardian Clash Over The Future Of Latvia

Well, it is not about the King Edward VII, but kind of Edwardian style, hopefully ...

Edward Lucas of The Economist proudly posted the article on his blog today. However, Edward Hugh responded to the article in The Economist quite hard:

Basically there is no doubt that Latvia's great economic fall may be coming to an end, but as I explained in this post here, that is not the same thing at all as resuming growth. To get back to growth Latvia's internal devaluation needs to be driven hard enough and deep enough to generate a sufficient export surplus to drive headline economic growth at a sufficient speed to start creating jobs again. This is not about a fiscal adjustment, it never was, and it is little consolation for Latvia to be compared with Greece and told that they are doing just that little bit better. Cry Victory we are told, and unlease the jobs of war. Would that things were as easy done as said!
Not to wait for long and Paul Krugman joined the ring too.

I wrote about the inflated Latvian wealth expectations very recently ...

Latvian banking narcissists were talking hyperventilated about the"turning point" in domestic consumer demand, as local statistics reported today:
Compared to December total retail trade turnover in January 2009 has increased by 4%, according to seasonally adjusted data (calculating at constant prices). Retail trade turnover in enterprises selling mainly food products grew by 1.7%. But in enterprises selling mainly non-food products retail trade turnover growth in January reached 5.3%.

Non-adjusted data marked the lowest level since "depression" started, and the seasonal adjustment from the "December of hunger", as food sales grew by 1.7%, may play a certain role in the "turning point" ...

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